Theresa may has to do corporate reform to get her way

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It's not very often that I quote great chunks of any party leaders speech here, but this lot came from Theresa May yesterday:

Yet within our society today, we see division and unfairness all around. Between a more prosperous older generation and a struggling younger generation. Between the wealth of London and the rest of the country.

But perhaps most of all, between the rich, the successful and the powerful - and their fellow citizens.

Now don’t get me wrong. We applaud success. We want people to get on.

But we also value something else: the spirit of citizenship.

That spirit that means you respect the bonds and obligations that make our society work. That means a commitment to the men and women who live around you, who work for you, who buy the goods and services you sell.

That spirit that means recognising the social contract that says you train up local young people before you take on cheap labour from overseas.

That spirit that means you do as others do, and pay your fair share of tax.

But today, too many people in positions of power behave as though they have more in common with international elites than with the people down the road, the people they employ, the people they pass in the street.

But if you believe you’re a citizen of the world, you’re a citizen of nowhere. You don’t understand what the very word ‘citizenship’ means.

So if you’re a boss who earns a fortune but doesn’t look after your staff…

An international company that treats tax laws as an optional extra…

A household name that refuses to work with the authorities even to fight terrorism…

A director who takes out massive dividends while knowing that the company pension is about to go bust…

I’m putting you on warning. This can’t go on anymore.

No, I'm not becoming a Tory, any more than I am becoming anything else, but this is worth noting.

First because that was a Conservative speech, not a liberal one. There's little of the spirit of Chicago, or even Manchester, in there.

Second, because whilst there is a lot about what has been said in Birmingham that I greatly dislike, this has merit to it.

And third, because this suggests that Theresa May has real work to do.

The last matters to me. If she really thinks she is going to change corporate culture she has to indicate that she wants them to do so. The clearest way to do this is to change Section 172 of the Companies Act 2006 which lays out the duties directors have to their shareholders and to other parties. That section actually says:

A director of a company must act in the way he considers, in good faith, would be most likely to promote the success of the company for the benefit of its members as a whole, and in doing so have regard (amongst other matters) to—

(a) the likely consequences of any decision in the long term,

(b) the interests of the company’s employees,

(c) the need to foster the company’s business relationships with suppliers, customers and others,

(d) the impact of the company’s operations on the community and the environment,

(e) the desirability of the company maintaining a reputation for high standards of business conduct, and

(f) the need to act fairly as between members of the company.

Let's suppose Theresa May really thinks what she says. Then she could reform Section 172 to say:

A director of a company must act in the way he or she considers, in good faith, would be most likely to promote the success of the company for the benefit of all who deal with it, and in doing so have regard (amongst other matters) to—

(a) the members of the company and their expectation of enjoying a reasonable return on their capital;

(b) the likely consequences of any decision in the long term,

(c) the interests of the company’s employees,

(d) the need to foster the company’s business relationships with suppliers, customers and others,

(e) the obligation of the company to settle its tax liabilities,

(f) the impact of the company’s operations on the community and the environment,

(g) the desirability of the company maintaining a reputation for high standards of business conduct, and

(h) the need to act fairly as between members of the company.

Changes are highlighted in red.

I suspect with a little time I would refine that further, but I think my point is clear. Theresa May could make these changes and out in place the environment she wants. But will she?